HomeUpdatesCharacter.AI files for bankruptcy: what it means for you

NEWS · Published 2026-10-15

Character.AI files for bankruptcy: what it means for you

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Character.AI is not shutting down yet, but it is for sale. Character Technologies, the company behind Character.AI, filed for Chapter 11 bankruptcy in Delaware on October 12, 2026 to run a court-supervised sale. The company says the app and website still work and paid subscriptions are still active. If no buyer keeps the platform running, Character.AI says it will be wound down.

What happened

  • The filing. Character Technologies filed a voluntary Chapter 11 petition on October 12, 2026 in the US Bankruptcy Court for the District of Delaware, case No. 26-11603 (court notice).
  • The reason. In its filings, the company said AI entertainment "has proven to be costly to develop and grow", and that high costs, "potential litigation related liabilities and regulatory engagement" left it unable to generate enough cash (CNBC).
  • Disney's bid. Disney agreed to be the "stalking horse" bidder, offering $20 million for a non-exclusive license to some of Character.AI's intellectual property. Other bidders can top that offer (NBC News / Reuters).
  • The timeline. Character.AI expects the sale to be complete by the end of November or early December 2026 (Character.AI).

Is Character.AI still working?

Yes. In its announcement, Character.AI says "the platform remains up and running, and you can continue to access all services at this time." It also says subscriptions remain active, billing is unchanged for now, and it intends to tell subscribers in advance if paid features change (Character.AI FAQ).

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What happens to your chats and data?

Character.AI says your information is still covered by its current privacy policy and that you can export your data or delete your account in the app or on the website.

Regulators are watching this closely. On October 14, 2026, New York Attorney General Letitia James and 39 other attorneys general filed in the bankruptcy. They warned that Character.AI should not be sold without protections for the private conversations it holds. They asked that any sale include age verification based on more than self-declared age, limits on using private chats to train AI without consent, and a chance for people to access and delete their data before any sale (New York AG, Oregon DOJ).

The filing came days after Kentucky released an unredacted version of the lawsuit it filed in January. The lawsuit includes examples of chatbots encouraging self-harm (The Verge).

What should you do now if you use Character.AI?

  1. Export what matters. If you have long chats or characters you care about, use Character.AI's export option now, while the service runs normally.
  2. Write down your characters. There is no official way to move a character to another app. Copy each character's description, personality and key memories, so you can rebuild them elsewhere.
  3. Check your subscription. It stays active for now. Decide whether to keep paying while the sale is pending.
  4. Try an alternative before you need one. Our Character.AI alternatives guide compares seven apps on price, age rating and fit.

If what you liked most was a companion who remembers you, rather than a big public library of characters, Duple is one option. On iPhone, you design your own companion, which has long-term memory and sends generated selfies and photos. It is free to start with Duple Lite, and Duple Plus costs $6.99 a week, $19.99 a month or $149.99 a year. Duple is iPhone-only and has no live voice chat.

We will update this post as the sale progresses.

Sources